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2044 Unit TWO - Property & Liability Insurance Concepts
Terms in this set (77)
the chance of financial loss
What is insurance?
A contract whereby one undertakes to indemnify another or pay or allow a specified amount of a determinable benefit upon determinable contingencies.
- a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
What is an insurance policy?
A written contract of or written agreement for or effecting insurance, or the certificate thereof, by whatever name called, and includes all clauses, riders, endorsements, and papers which are a part thereof.
- a document detailing the terms and conditions of a contract of insurance.
Contracts must be 5 things in order to be valid:
1) A manifestation of assent to its terms by the parties who make the contract.
2) A sufficient consideration (value or payment) for each promisee
3) Legal capacity of the parties to contract
4) Not against public policy or otherwise illegal
5) In FL, a minor 15 years or older may enter into a contract for insurance.
The actual payment or the promise to pay
- the premium and
- the agreement to the terms and conditions in the policy both by the insurer and the insured
~something of value exchanged for something else of value
A standard policy is one that, for a given coverage, is substantially like the policies written by all or a majority of companies in the field.
The contract form that has been adopted by many insurers, approved by state insurance departments, or prescribed by law
> Modifications are made to suit the needs of the individual
The wording of a statutory policy is standardized through state law.
While few, state laws have prescribed many minimum standard statutory provisions to be included in insurance contracts.
Insurance may be placed into effect or "bound," prior to issuance of a policy contract.
Temporary insurance is effected through "binders" which are also addressed by the FL statutes.
FL statutes say:
binders can be made orally or in writing for temporary property, marine, casualty, or surety insurance. It shall include all usual terms of the policy, including endorsements designated in the binder, excluding specifically excluded ones...etc..
Provides payment to the insured person if his or her property is damaged or destroyed by an accident covered by the insurance policy.
-payment by the INSURER to the INSURED or SPECIFICALLY NAMED INTERESTS
insurance that provides protection from claims arising from injuries or damage to other people or property
-payment on BEHALF of the insured TO ANOTHER
Insurance contract characteristics
-it is a personal contract
-it is conditional
-it is a contract of adhesion
-it is a contract of indemnity
-it requires a person to have insurable interests at the time of the insured-against contingency.
Property and Liability policies cover __________________, NOT ___________________ or ___________________
PEOPLE(persons) NOT property or operations
this makes it a PERSONAL contract
the obligation of the insurer to perform may be conditioned upon the insured satisfying certain conditions makes insurance contracts CONDITIONAL.
Contract of Adhesion
the insured must accept the entire contract with all of its terms and conditions
- the insured cannot negotiate the terms, having to take the offer of the other party ( the insurer) as made.
- Any ambiguities in the contract are resolved in favor of the insured
one should not profit from the response provided by the policy.
see pg 26 in book
F.S. 627.405 requires insurable interest:
1) no contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured at the time of the loss
2) Insurable Interest means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment
3) The measure of an insurable interest in property is the extent to which the insured might be indemnified by loss injury or impairment thereof.
Which, if any, of the following are "elements" of the No-Fault Law?
A)those that are subject to the law, and comply with the law, are immune from legal liability for causing bodily injuries to others
B)Personal Injury Protection (PIP), is the first party coverage which affords coverage to those injured in automobile accidents without regard to fault
C)the No-Fault law requires PIP coverage be carried by the owners of motor vehicles; and imposes penalties for failing to do so
D)all of the above
D All of the above
In the Dwelling Fire DP-1 policy form, "other coverages" ____ increase the limits of insurance for each stated coverage.
B) Do not
In the Dwelling Fire Policy Coverage D - Fair Rental Value protects the insured or loss of fair rent IF:
A)the dwelling is damaged by a covered peril
B)the dwelling is uninhabitable
C)payments made compensate the insured only for the necessary period of restoration
D)all of the above
D) All of the above
In conclusion, an insurance agent can demonstrate ethical behavior by...
A)knowing and following the underwriting and procedural rules of each company represented
B)knowing and following the insurance laws enacted to protect the insurance consuming public
C)maintaining current knowledge of the insurance industry
D)practicing the golden rule by demonstrating: honesty, loyalty, fidelity, and altruism
__________ is by and large when a property is without occupant or content (entirely and materially empty).
Vacancy is by and large when a property is without occupant or content (entirely and materially empty).
In the event of a company becomes insolvent, the DFS manages the liquidation process to protect the interest of claimants, the public, and the Guarantee Fund (on behalf of the public). The administration of the liquidation is known as:
The process of liquidating an insolvent insurance company to protect the interest of claimants, the public and the Guarantee Fund is know as "receivership".
Mutual Insurance Companies are owned by __________ who elect a board of directors which oversees the management of the company.
Mutual Insurance Companies are owned by the policyholders; the policyholders are in effect "shareholders". As a policyholder, the insured can vote for board members and also receive dividends if declared by the board of directors.
Insurance company are required to provide either a _____ days notice of a policy renewal or non-renewal.
Shelby was injured in an auto accident and has $90,000 I injuries and has a $1,000 PIP deductible. How much will Shelby receive as a claims payout from her insurance company?
Shelby only receives $10,000 ($90,000 injuries - $1,000 deductible = $89,000 X 80% = $71,200 available for payment but the maximum PIP benefit is $10,000)
In Florida the HO-6 Condo policy is required to have a minimum of _______ for the Additional Coverage of Loss Assessment.
In Florida the HO-6 Condo policy is required to have a minimum of $2,000 for the Additional Coverage of Loss Assessment.
Florida law dictates that all BUT one of the following is the "transacting of insurance"; which of the following does not meet the state' definition of "transacting insurance"?
"Transact" with respect to insurance includes any of the following: solicitation or inducement; preliminary negotiations; effectuation of a contract of insurance;or transaction of matters subsequent to effectuation of a contract of insurance.
Citizens Property Insurance Corporation is a "market of last resort" for properties that are uninsurable in the voluntary market. There are however risk that are uninsurable by Citizens including... (select all that apply)
Uninsurable residential properties by Citizens include:
(a): vacant or "unoccupied" properties;
(b) property in disrepair;
(c) properties over fifty (50) years old unless the wiring, heating and roof have been updated;
(d) do-it-yourself construction;
(e) condemned, inaccessible or property built over water; and (f) property with excessive or unusual liability exposure.
In the Homeowners Insurance Policy "debris removal and reasonable repairs" after a loss are covered up to ___% of Coverage A.
In the Homeowners Insurance Policy "debris removal and reasonable repairs" after a loss are covered up to 5 % of Coverage A.
MEWAs _____ considered insurers by Florida Statute and _____ required to #14736obtain a Certificate of Authority.
MEWAs are considered insurers by Florida Statute and are required to obtain a Certificate of Authority.
Which federal law mandates the state regulation of insurance?
A)State Insurance Act of 1945
B)Federal Insurance Act of 1945
C)McCarran-Ferguson Act of 1945
D)Unauthorized-Insurer State Mandated Coverage Act of 1945
The McCarran-Ferguson Act of 1945 federally mandates state regulation of insurance.
Which, if any, of the following statements are true regarding Coverage A- Dwelling coverage?
Statement One: Coverage A covers the dwelling and structures attached to it Statement Two: Coverage A covers construction materials and supplies on or adjacent to the residence premises
A)Statement One is correct
B)Statement Two is correct
C)both Statement One and Statement Two are correct
D)neither is correct
Coverage A- Dwelling in the Homeowners policy covers the dwelling building and attached structures; and also covers construction materials and supplies on or adjacent to the premises.
The "policy territory" for the Personal Auto Policy includes all EXCEPT which of the following?
A)U.S., its territories or possessions
The PAP section "Policy Period and Territory" states that coverage applies only to accidents and losses that occur during the policy period and within the U.S. (including territories or possessions), Puerto Rico, and Canada.
When Vandalism is added to the DP-1 policy form damage to building glass, crime losses, and coverage for vacancy of 60 days or more preceding the loss are ______________.
All of the following offices, departments, and officials are involved in Florida's "financial services regulation" EXCEPT:
A)Chief Financial Officer
B)Office of Financial Regulation
C)Office of Insurance Regulation
D)Department of Motor Vehicles
Financial Services Regulation in Florida is carried out principally through the Chief Financial Office (CFO) of Florida. The CFO works with the Department of Financial Services and through a Financial Services Commission comprised of: Chief Financial Officer, Department of Financial Services, Financial Services Commission, Office of Financial Regulation, and the Office of Insurance
In arbitration, the opposing parties to a dispute each submit their evidence to a ___________ agreed upon third party, called an arbitrator.
In arbitration, the opposing parties to a dispute each submit their evidence to a mutually agreed upon third party, called an arbitrator.
The NFIP flood insurance _____ available in any community that HAS NOT adopted and enforced federal floodplain regulations.
An "eligible NFIP community" is one that adopts and enforces federal floodplain management regulations that meet National Flood Insurance Program criteria. NFIP flood insurance IS NOT available in any community that HAVE NOT adopted and enforced federal floodplain regulations.
The health insurance provision which limits an insurers defenses or reservations that an insurer may raise to deny a claim or void a policy is the "limitations on insurer defense" provision. What is the time frame that the limitation is in existence?
The Limitations on Insurer Defense (Incontestable clause or Time Limit on Certain Defense) - has a two year limitation to defenses or reservations an insurer may raise to deny a claim or void a policy.
True or False? Ethics is the study of normal behavior and is the cornerstone of professionalism in the insurance industry.
A ________ insurer is one formed under the laws of any state, district, territory, or commonwealth of the United States "other than this state"
A "foreign" insurer is one formed under the laws of any state, district, territory, or commonwealth of the United States other than this state.
Customer representatives ____ share in commissions with a licensed insurance agent.
Customer representatives may share in commissions with a licensed insurance agent.
The "additional coverages" section of the Homeowners Insurance Policy provides up to $_____ coverage for property damage to property of others caused by the insured irrespective of legal liability
The "additional coverages" section of the Homeowners Insurance Policy provides up to $1,000 coverage for property damage to property of others caused by the insured irrespective of legal liability.
Surgical Expense Insurance pays benefits:
A)per day/per room
B)in excess of all other coverage
C)on a payment of schedule basis (a list of procedures with payment amounts specifically listed)
D)expenses of hospital room and board
Surgical Expense Insurance pays benefits on a payment of schedule basis (a list of procedures with payment amounts specifically listed).
True or False? PPOs are organized by insurance companies that contract with physicians and hospitals who offers their services via a negotiated scheduled contract.
PPOs are organized by physicians and hospitals that contract with an insurance company who offers their services via a negotiated scheduled contract.
The Office of Insurance Regulation _______________ the qualifications of insurance company's financial conditions.
Which part of the OIR's "market conduct examinations" analyzes the marketplace to uncover unlawful or harmful practices negatively impacting insurance consumers
The OIR's Market Analysis Section analyzes the marketplace to uncover unlawful or harmful practices negatively impacting insurance consumers.
True or False? The Florida Statutes require any policy with the RCV provision in it not hold-back for depreciation not withstanding the repair or replacement of damaged property.
John purchased an Automobile Insurance policy thirty days ago with Acme Insurance Company; which if any of the following are reasons John can cancel the policy?
Within the first sixty (60) days of a new policy the insured has limited reasons for cancelling, such as total destruction,purchasing replacement coverage with another insurer, or selling the vehicle.
Admitted insurance companies have _____________ a license to do business with the state of Florida.
Admitted Insurance Companies have been granted a license to do business within their respective state (e.g. Florida). Not-Admitted Companies are not authorized "by the stateinsurance department to business within a state (Note: a Not-Admitted Company may still transact business in the surplus lines market if insurance in unavailable from any admitted insurer).
Florida Statutes require Medicare Supplement Insurance to:
A)have easy read policy language
B)be returnable within 90 days of purchase for full premium refund
C)both A and B
D)neither A or B
Florida Statutes require Medicare Supplement Insurance to: have easy read policy language; be returnable within 30 days of purchase for full premium refund; provide an outline of coverage with a Medical Supplement Buyers' Guide; and limit coverage limitations for pre-existing conditions to six months.
The Appraisal condition in a policy is used to resolve differences between the insured and insurance company when there is dispute as to the _____________ in a claim
A)cause of loss
B)amount of loss
amount of loss
Brenda has a PIP claim with $8,000 in injuries and a $0 PIP deductible. How much will Brenda receive as a claims payment from her insurance company?
$6,400 payout to Brenda ($8,000 injuries - $0 deductible = $8,000 X 80%)
Major Medical Insurance policies typically have all of the following EXCEPT:
In the Personal Articles Floater (PAF) policy the "pairs, sets and parts provision reserves the insurance companies right to:
A)deny any claim that is a partial loss
B)elect to repair or replace or to restore the pair or set to a depreciated value, or to pay the insured a flat amount for the partial loss not to exceed $500
C)elect to repair or replace or to restore the pair or set to original value, or to pay the difference between ACV before and after the loss
D)the PAF does not have a "pairs, sets and parts provision"
In the Personal Articles Floater (PAF) policy the "pairs, sets and parts provision reserves the insurance companies right to elect to repair or replace or to restore the pair or set to original value, or to pay the difference between ACV before and after the loss.
Commonly referred to as "rebating", agents ______ permitted to pay, allow, give, or offer to pay to an insured directly or indirectly any inducement to purchase any policy of insurance
All BUT which of the following are insurance agent licensing requirements?
A)applicant must be a natural person at least twenty-one years of age
B)applicant must be a United States citizen or legal alien lawfully permitted to work in the U.S
C)applicant's intended place of business must be in Florida
D)applicant must pass a background check undertaken by department
The following are 20-44 agent licensing requirements: applicant must be a natural person at least eighteen years of age; applicant must be a United States citizen or legal alien lawfully permitted to work in the U.S.; applicant's intended place of business must be in Florida; applicant must not be applying for licensed for the intended purpose of placing "controlled business"; applicant has passed any required examination for the license; and applicant must pass a background check undertaken by department.
An unauthorized insurer was caught transacting business without a Certificate of Authority. The amount of the premium involved in the transaction was over $100,000. What degree felony is this unauthorized insurer guilty of?
Unauthorized insurers transacting insurance in the state of Florida are subject to a: third degree felony if the premium transaction is under $20,000second degree felony if the premium transaction is under $100,000first degree felony if the premium transaction is over $100,000.
Which of the following is true?
Statement One: The replacement cost endorsement is an exception to the rule of indemnity.
Statement Two: Agreed valuation and stated value policies are not an exceptions to the rule of indemnity.
The replacement cost endorsement is an "exception" to the rule of indemnity. Agreed valuation and stated value policies are also exceptions to the rule of indemnity.
The Office of Financial Regulation is responsible for the oversight of Florida's financial service providers; which if any of the following statement are true?
Statement One: to promote a safe and sound financial marketplace. Statement Two: to contribute to Florida's growth with effective regulation of the financial services industry.
both Statement One and Statement Two are correct
The Office of Financial Regulation is responsible for the oversight of Florida's financial service providers, specifically: to promote a safe and sound financial marketplace; and to contribute to Florida's growth with effective regulation of the financial services industry.
Sally Sugar lives in Georgia and wants to obtain a Florida 20-44 Personal Lines Agent license to sell automobile insurance in Georgia from her home.
Can Sally obtain a 105192BW Personal Lines Agent license as described above?
Sally's application of insurance must show that she is a bona fide resident of or whose place of business is in Florida and that she will have a place of business in Florida with an identifiable and accessible location to the public in Florida.
Preferred Provider Organizations (PPO) provide the insured with comprehensive
health services with a focus on:
D)all of the above
D) All of the above
Preferred Provider Organizations (PPO) provide the insured with comprehensive health services with a focus on managed care, cost containment, and flexibility
All of the following are "not eligible" as a named insured for a Homeowners policy EXCEPT:
C)individual owner occupant of a 1-4 family dwelling
Corporations, partnerships, estates, trust and non-owner occupancies are not eligible as Named Insureds for a Homeowners policy.
Section I Exclusions in the ISO HO 00 03 05 11 policy form state: "We do not insure for loss caused directly or ___________ by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss."
As regards policy "exclusions" typical policy language states: We do not insure for _____ caused directly or indirectly by any of the following. Such ______ is excluded regardless of any other cause or event contributing concurrently or in any sequence to the ____." What is the missing term?
Sally has suffered a total loss on her 2010 Ford Fusion. Her insurance company is required to pay Sally the cost to replace the totaled vehicle..
D) with a comparable vehicle less salvage value and less sales tax
Licensees ______ share commission with a corporation if it is a licensed insurance agency.
__________ is knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, which is false or maliciously critical of, or derogatory to, any person and which is calculated to injure such person.
In the Homeowners Insurance Policy, what is the "specific limits" listed in the policy #14711 for the following classes of personal property: securities; watercraft and related equipment; trailers; theft of jewelry, watches, furs and precious stones; electronic apparatus in a motorized vehicle; and electronics used primary for business purposes while away from the residence premises?
$1,500 applies for each of the special categories of: securities; watercraft and related equipment; trailers; theft of jewelry, watches, furs and precious stones; electronic apparatus in a motorized vehicle; and electronics used primary for business purposes while away from the residence premises.
The insured has had a $60,000 loss and it has been discovered the she #14650 has two liability policies which both apply to the same loss on a pro-rata basis. The first policy has a $1,000,000 limit and the second policy has a $2,000,000 limit. How much will each company pay towards this loss?
The first company will pay $20,000 and the second company will pay $40,000
Pro-rata shares requires each company to pay a portion of the total loss that is a based upon the company's proportion to all available limits. The first company has a proportion of $1,000,000/$3,000,000 which is 1/3 of the total loss. The second company has a proportion of $2,000,000/$3,000,000 which is 2/3 of the total loss.
All of the following statements are correct concerning Hospitalization Indemnity Insurance EXCEPT:
A)payments are made directly to the hospital
B)benefits are paid on a maximum daily room rate
C)benefits are limited to a maximum number of days
D)used as supplement to other coverage
The Hospitalization Indemnity Insurance policy features include: payments made directly to the insured; benefits paid on a maximum daily room rate; benefits limited to a maximum number of days; and the policy is used as a supplement to other insurance coverage. Hospitalization Indemnity Insurance narrowly cover only room and board at a hospital.
Which, if any, of the following are possible consequences for aiding or abetting an unauthorized insurer?
A)third degree felony
B)responsibility to pay for all unpaid claims
C)suspension or revocation of insurance licenses
D)all of the above
D) All of the above
Supplemental Payments include all but which of the following?
B)premiums on appeal bonds
C)interest accruing after an entered judgement
Supplementary payments include (with limitations) the cost of bail bonds, premiums on appeal bonds, interest accrued after a rendered judgment, loss of earnings due to attendance at hearings or trails by the insured; and other reasonable expenses incurred at the insurance company's request.
ERISA has a ___________ which sets apart for the states all rights not reserved under ERISA.
The insuring agreement in the liability section of a policy has two major responsibilities. The insurer's first duty is to "pay up to our limit of liability for the damages for which an 'insured' is legally liable". What is the second responsibility/duty?
A)provide a defense for the insured
B)arbitrate with the insured
C)mediate with the insured
D)litigate with the insured
The second major duty is to "provide a defense" up to the point of the policy limits being "exhausted by payment of a judgement or settlement.
Which if either of the following statement regarding PAP PIP Endorsements are true?
Statement One: Extended Personal Injury Protection - Extends PIP medical benefits to 100% and work loss benefits to 80% - applicable to the named insured and family members onlyStatement Two: Additional Personal Injury Protection - Increases the basic PIP benefit of $10,000 per person for additional amounts
A)Statement One is correct
B)Statement Two is correct
C)both Statement One and Statement Two are correct
D)neither is correct
Both statements are correct - Extended Personal Injury Protection - Extends PIP medical benefits to 100% and work loss benefits to 80% and is applicable to the named insured and family members only; and Additional Personal Injury Protection increases the basic PIP benefit of $10,000 per person for additional amounts and is also only applicable to the named insured and family members.
Major Medical Insurance polices protect against ____________ losses.
What is the major difference between the "guaranteed renewable" cancellation clause and the "non-cancellable" cancellation clause?
The major difference between the "guaranteed renewable" cancellation clause and the "non-cancellable" cancellation clause is that guaranteed renewable clauses permit premium increases by age or class and non-cancellable do not.
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